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Payroll Outsourcing in Texas: What Businesses Need to Know
Payroll outsourcing in Texas means a provider running payroll under Texas rules: no state income tax withholding, new hires reported within 20 days, and a discharged employee's final pay within 6 calendar days of discharge. BEG manages it for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
What a Texas payroll actually has to get right
General information for 2026, not legal advice. Deadlines and rates change; confirm with the Texas agency before acting.
| State income tax on wages | None |
|---|---|
| Pay-frequency law | Exempt staff monthly; others at least semi-monthly |
| New hire reporting deadline | 20 days (federal default) |
| Final paycheck, discharge | Within 6 calendar days of discharge. [Tex. Lab. Code 61.014] |
| Final paycheck, resignation | By the next regular payday. |
| Accrued PTO at separation | No state law forces a payout. Accrued PTO must be paid out only if your written policy or agreement provides for it, so your policy language controls. |
| 2026 minimum wage | $7.25 (adopts the federal rate by reference) [DOL state minimum wage table] |
| Overtime rule | Federal FLSA rules (weekly over 40) |
| Paid sick and family leave | No state paid sick or family leave mandate |
| Continuation coverage under 20 employees | Texas State Continuation Coverage, up to 9 months. Applies to fully-insured group health plans generally (including small employers with 2 to 19 employees who are not subject to federal COBRA). Small employer health benefit plans must provide continuation under Insurance Code Chapters 1251 and 1271 [Tex. Ins. Code sections 1251.251-1251.260 (esp. 1251.252 eligibility, 1251.255 duration/termination); HMO parallel at Tex. Ins. Code Chapter 1271] |
Registrations and filings a provider handles in Texas
Texas has no tax on wages, which removes one registration and one deposit schedule from the setup list. It does not remove the state from payroll: Texas unemployment insurance still needs its own employer account and quarterly wage reports, and new hires still go to the Texas directory within 20 days (federal default). Employers moving in from a withholding state most often trip on the assumption that no income tax means no state filings at all.
Where Texas diverges from the federal baseline
Pay frequency: exempt staff monthly; others at least semi-monthly. The run calendar is set to that rule at implementation so a schedule change never becomes a wage claim.
Overtime follows federal FLSA rules (weekly over 40), so the federal regular-rate rules govern: bonuses, shift differentials and commissions all fold into the rate before the premium is applied.
On discharge in Texas the final check is due within 6 calendar days of discharge, and on resignation by the next regular payday. Accrued PTO follows the written policy, so the handbook language decides whether the last check includes it. Full detail on the Texas final paycheck rules page.
Leave: no state paid sick or family leave mandate. Sick and vacation accrual in Texas follow the employer's own policy, and payroll tracks exactly what that policy promises, no more. Remote employees working from a mandate state are the exception: their leave follows the state they work in, not Texas.
What BEG managed payroll includes for Texas employers
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum and no setup fee. Texas unemployment registration, quarterly and annual state filings, new hire reporting within 20 days (federal default), final-pay runs on the Texas deadline, and year-end W-2s are all inside that price. Live in 3 to 5 business days from signing.
Managed Payroll, Handled.
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Frequently Asked Questions
Does Texas have state income tax withholding?
No. Texas levies no tax on wages, so there is no state withholding account to open and no state withholding to remit. Federal withholding, Texas unemployment insurance and new hire reporting still apply to every Texas employer.
When is a final paycheck due in Texas?
On discharge: within 6 calendar days of discharge. On resignation: by the next regular payday. No state law forces a payout. Accrued PTO must be paid out only if your written policy or agreement provides for it, so your policy language controls. Source: Tex. Lab. Code 61.014.
How often must Texas employers pay employees?
Texas pay-frequency rule: exempt staff monthly; others at least semi-monthly. A payroll provider sets the run calendar to that rule at setup, so the schedule is never the thing that creates a wage claim.
How fast must new hires be reported in Texas?
Texas requires new hire reporting within 20 days (federal default). That matches the federal default, and the report goes to the Texas new hire directory, not the IRS.
Does Texas require paid sick leave or paid family leave?
No state paid sick or family leave mandate. With no statewide sick-leave mandate, Texas accrual rules come from the employer's own policy, and payroll tracks whatever that policy promises.
What is the Texas minimum wage in 2026?
$7.25 (adopts the federal rate by reference). Overtime in Texas: federal FLSA rules (weekly over 40).
What does managed payroll cost for a Texas business?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum and no setup fee. Texas withholding, unemployment filings, new hire reports and year-end W-2s are included, not add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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